Economy

Top 10 Non-Bank Financial Companies (NBFCs) That Pay High Rates Of Interest On Fixed Deposits

COVID-19’s impact on various sectors and industries is causing the economy to struggle. It is critical to save and invest your hard-earned money in FDs. But where are you going? Due to the slowing economy, most banks have slashed their FD rates. Nowadays, finding high-interest rate FDs has become difficult due to the fact that almost every financial institution, particularly banks, is struggling with their operations and deposits. Some NBFCs (non-banking finance companies) have suddenly begun to offer higher interest rates on their deposits than traditional commercial banks.

These NBFCs offer attractive interest rates and do not require a large sum of money to open an FD with them. An individual can open a fixed deposit (FD) with a minimum investment of Rs 1000 to Rs 10000 in the institution of their choice.

Top 10 Non-Bank Financial Companies (NBFCs)
Top 10 Non-Bank Financial Companies (NBFCs)

NBFC

Here are ten NBFCs with a good return on investment, a high rate of interest, and a long history of offering fixed deposits to various customers.

Sr. No.NBFCInterest Rates (p.a)Interest rate (p.a) Senior CitizensMinimum DepositTenure
1Hawkins Cooker Ltd8.00%NA250003 years
2Shriram City Union Finance7.75%8.05%50005 Years
3Shriram Transport Finance Company7.48%7.78%50005 years
4Muthood Finance7.25%NA10005 Years
5Bajaj Finserve6.80%7.05%250003-5 years
6HDFC Housing Finance6.70%6.95%NA8.25 Years
7Aditya Birla Capital6.45%6.70%50005 Years
8Mahindra & Mahindra Finance Service Ltd6.05%6.50%50005 Years
9KTDFC Ltd6.00%6.25%100003 Years
10Sundram Finance5.80%6.30%100003 Years

All you need is your PAN and a valid identity and address proof document, such as an Aadhaar Card, to start investing in these NBFC FDs. Some of them allow you to invest online, while others require you to invest in person. Senior citizens receive a 20 percent to 50 percent discount on the regular interest rates offered to other customers. It’s worth noting that, unlike bank FDs, corporate/NBFC FDs are not insured by the DICGC.

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Are Corporate FDs Taxable?

Interest earned on NBFC-issued FDs is taxed at the depositor’s highest income tax rate, just like interest earned on bank FDs. The investor is only required to pay tax if the annual interest income from the deposit exceeds Ra 5,000.

Why invest in Corporate FDs rather than Bank FDs?

Individuals looking for better returns and diversification in their portfolios should consider corporate FDs. They pay a higher interest rate than bank FDs. They can be compared in terms of operations and ratings, making finding a suitable corporate FD candidate easier.

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Conclusion

Given the low interest rates offered by banks, depositors should consider putting a portion of their savings into FDs offered by NBFCs. You can consider these deposits after exhausting the government’s small-savings programmes. Although debt funds are preferred, these NBFC deposits are appropriate for cautious investors. Choose NBFC FDs with high-rated deposits or deposits rated AAA by rating agencies such as CRISIL and ICRA when making your decision.

These are not intended to be taken as recommendations. If you’re unsure, consult a financial expert or go to the NBFC’s website for more information.

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